ArcelorMittal, Gold Fields Win Carbon Tax Delay

After objections from heavy polluters, including metal companies ArcelorMittal and Gold Fields, South Africa has delayed implementing a carbon tax until 2015.

In his budget speech this week, minister of finance Pravin Gordhan said the government will tax carbon emissions beginning in 2015 at a rate of R120 ($13.37) per ton of CO2e on 40 percent of a company’s emissions. The tax will rise 10 percent a year until 2020.

Gordhan said the tax-free exemption threshold of 60 percent will “soften the impact” to businesses, and said the government will set additional allowances for heavy-emitting industries.

The treasury previously said it would impose the tax this year.

Sven Lunsche, a spokesman for Gold Fields in Johannesburg, told Bloomberghis company welcome the delay of the carbon tax, which he says will only add to the rising cost of doing business. He also questioned whether carbon tax revenue would actually be used to fund nationwide carbon mitigation.

Shares of ArcelorMittal dropped more than 6 percent on Wednesday following South Africa’s carbon tax announcement, Reuters reports.

The electricity sector, the metals industry and transportation produce about 80 percent of South Africa’s CO2 emissions, according to government estimates. During the 2009 Copenhagen climate change talks, South Africa said it would reduce its GHG emissions by 34 percent by 2020 and 42 percent by 2025 — with financial and technical support from developed countries.

In his budget speech, Gordhan said the government will direct spending toward environmental programs, such as installing solar water heaters, procuring renewable energy, low-carbon public transport, cleaning up derelict mines, and addressing acid mine drainage.

He also encouraged the private sector and smaller public entities to develop low-carbon projects through the government’s Green Fund for low-carbon initiatives, and said the government has allocated an additional R300 million ($33,435,000) on top of the program’s original R800 million ($89,160,000). In the first call for proposals, the Green Fund received 590 applications. The second call for proposals opened this month.